Google Loses Trademark/Search Case, Amazon Changes Affiliate Program

If you’re not a techie or intellectual property attorney, I suggest you stop reading now.

Yesterday, TechCrunch reported on Google’s loss in litigation dealing with sponsored search. In short, the question is whether or not it is illegal to use a search for a trademarked term to trigger the display of a competitor’s ad. For example, if I search for “McDonald’s store locations,” Google and Burger King know that I’m interested in fast food and could display a Burger King ad next to the search results. The courts are trying to decide if this violates McDonald’s trademark.

The decision yesterday doesn’t actually decide the case, but the appellate court did remand the case back to the lower court with orders to reconsider its initial verdict. While from a legal standpoint nothing has changed, it seems that the fallout from the decision has already begun. Early this morning I received the following e-mail from Amazon Associates:

Dear Amazon Associate:

We’re writing to let you know about a change to the Amazon Associates Program. After careful review of how we are investing our advertising resources, we have made the decision to no longer pay referral fees to Associates who send users to www.amazon.com, www.amazon.ca, or www.endless.com through keyword bidding and other paid search on Google, Yahoo, MSN, and other search engines, and their extended search networks. If you’re not sure if this change affects you, please visit this page for FAQs.

As of May 1, 2009, Associates will not be paid referral fees for paid search traffic. Also, in connection with this change, as of May 1, 2009, Amazon will no longer make data feeds available to Associates for the purpose of sending users to the Amazon websites in the US or Canada via paid search.

This change applies only to the Associates programs in North America. If you are conducting paid search activities in connection with one of Amazon’s Associates Programs outside of the US and Canada, please refer to the applicable country’s Associates Program Operating Agreement for relevant terms and conditions.

We appreciate your continued support and participation in this advertising Program. If you have questions or concerns, please write to us by using the Contact Us form available on Associates Central.
Sincerely,

The Amazon Associates Program

In other words, Amazon is no longer paying associates for purchases made when the affiliate sends the purchaser to Amazon via a search ad on Google (or another search engine). While I suppose it could just be coincidence that Amazon made this change today, it’s not much of a leap to attribute it to the court decision.

My take? I don’t think there’s anything wrong with placing a competitor’s ad next to a keyword search for a trademark. As long as the ad isn’t misleading (i.e. it doesn’t say “Check out McDonald’s” and then send the user to Burger King’s site), I don’t see any problem with it. I don’t think having a trademark should mean that no one can ever use the trademarked term without your express consent. It should mean that I can’t sell my goods under your name or use a term/logo similar to yours with the intent to trick consumers. Of course, that’s just my lay opinion of what should be, not any sort of legal analysis.

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